NEW YORK/LONDON, March 28 (Reuters) - Gold turned higher
after touching six-week lows under $1,300 an ounce on Friday,
but marked its second straight weekly decline as an improving
U.S. economic outlook lifted the dollar and bolstered appetite
for risk.

Bullion has been volatile and has dropped about $100 an
ounce from a six-month high in the last nine trading sessions on
declining geopolitical tensions, strong U.S. economic data and
comments by Federal Reserve Chair Janet Yellen that interest
rates could rise in the first half of 2015.

Low interest rates, which cut the opportunity cost of
holding non-yielding bullion above other assets, had been an
important factor driving bullion higher in recent years.

Spot gold fell to its lowest since Feb. 12 at
$1,285.34 an ounce in earlier dealing before rebounding to trade
up 0.3 percent at $1,294.16 by 2:40 p.m. EDT (1840 GMT). Bullion
made a 3-percent weekly fall.

U.S. COMEX gold futures for April delivery settled
down 90 cents, or 0.07 percent, at $1,293.80 an ounce.

"Market participants over the past days have started to look
back at economic fundamentals and focus less on Russia, Crimea,"
Credit Suisse analyst Karim Cherif said.

"You will probably see prices continue to slowly slide
downward and unless you see renewed concern about the economic
side or Russia, which doesn't seem to be the case, prices should
fall."

The dollar rose 0.1 percent against a basket of
currencies, while European and U.S. shares also moved higher.

The U.S. currency was aided by data showing U.S. consumer
spending rose in February, in the latest sign that the economy
was regaining strength after a setback caused by bad weather.

"If we don't close below $1,290 today, we could see some
consolidation around these levels ahead of the ECB on Thursday
and the U.S. nonfarm payrolls on Friday," VTB Capital analyst
Andrey Kryuchenkov said, earlier in the session.

The next focus for the market will be the March nonfarm
employment report due next Friday, which will give clues on the
strength of the economy.

As a gauge of investor interest, holdings of the SPDR Gold
Trust, the world's biggest gold-backed exchange-traded
fund, remained unchanged from Thursday after two straight days
of outflows.

PHYSICAL DEMAND

In the physical markets, traders said demand could pick up,
given the recent sharp fall in prices but they remained cautious
as consumers seemed uncertain about the price direction from
current levels.

Prices in the world's biggest consumer, China, remained at a
discount to spot prices, indicating lack of fresh demand.

Platinum was up 0.86 percent at $1,403.75 an ounce,
while palladium gained 2.5 percent to $771.75 an ounce as
a miners' strike in South Africa continued for the tenth week.

"Platinum prices look rather cheap here considering the
severity of the situation in South Africa," UBS said in a note.

"We expect deliveries to start struggling in April - current
prices suggest that the market is not fully pricing in this
risk, therefore any indication of producer difficulties in
meeting their contractual agreements with customers in the
coming weeks is likely to have a considerable price impact."